What Are Preliminaries and How to Evaluate Them

MBJ Volume 1 2009 MASTER BUILDERS JOURNAL80

Introduction

In the construction industry, Bill ofQuantities (“BQ”) is a part andcommon feature in many tenderand/or contract documents forconstruction projects. Traditionally,BQ is prepared by the consultingquantity surveyors (“QS”), particularlyunder traditional or conventionalbuilding procurement system, usuallyfollowing the Standard Method ofMeasurement published by theInstitution of Surveyors, Malaysia(ISM) for building projects. A BQtypically comprises of preliminaries,preambles and measured works.

When there is a disruption or delay inthe project, which often leads toprolongation period of theconstruction contract, it is usual for

additional preliminaries to be claimedover the prolongation period by theContractor under prolongation costs,which essentially is a loss andexpense claim, as provided under therelevant contract clause/s of hestandard forms of constructioncontract in Malaysia.

In this article, Entrusty aims to providereaders with a better understanding ofPreliminaries, by answering thefollowing:-

• What are preliminaries ? ;• The relevant provisions under

the common standard forms ofbuilding/construction contract inMalaysia;

• Case studies/scenarios;• Methods in assessing additional

costs of Preliminaries .

What are preliminaries ?The purpose of Preliminaries sectionin BQ is to provide information,particulars, general obligations andliabilities, etc of the project concern totenderers, who should then price forthe various items provided under thissection.

The Preliminaries section, which formpart of the BQ is normally priced bythe tenderers separately from trade orelemental bills , which are integralparts of the BQ.

In the Standard Method ofMeasurement 2 in Malaysia, itemsunder Preliminaries are grouped into13 listed categories, as follows-

Your Contractual Question Answered

MBAM SECTION

What are Preliminaries and How to Evaluate Them?By The Entrusty Group

Entrusty Group, a multi-disciplinary group of companies, of which, one of their specialisation is in project,commercial and contractual management, has been running a regular contractual questions and answers sectionfor Master Builders member in the Master Builder Journal

In this instalment of this series, Entrusty Group will provide the answer to another frequently asked question:-What Are Preliminaries and How to Evaluate Them?

MASTER BUILDERS JOURNAL MBJ Volume 1 2009 81

In monthly progress paymentvaluations, the priced items in thePreliminaries section are normallydivided into three categories, namelyinitial, recurring and final costs by the

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1 Project, parties and consultants- name, nature and location of the project; general description of works; names and addresses of the Employerand Consultants to be named in the contract.

2 Description of site- information to indicate the boundaries of the site, the means of access and the position of the works; anydrainage, water, gas and other mains or power services known to exits on or over the site; any adjancent orabutting buildings; information to facilitate visiting the site

3 Drawings and other documents4 Form, type and conditions of contract5 Contractor's liability6 Employer's liability7 Obligations and restrictions imposed by the Employer

- access to and possession or use of the site; limitations of working space; limitations of working hours; theuse or disposal of any material found on site; hoardings, fences, screens, temporary roofs, temporaryname/sign boards and advertising rights; the maintenance of existing live drainage, water, gas and other mainsor power services on or over the site; the execution or completion of the work in any specific order or in sectionsor phases; maintenance of specific temperature and humidity levels; temporary accommodation and facilitiesfor the use of the Employer including air-conditioning, lighting, furnishing and attendance; the installation oftelephones for the Employer and the cost of his telephone calls; any other obligation or restriction such asrestriction upon the employment of labour, restriction on the use of radios by employees, restriction on thefelling of trees, car parking arrangements for the employees, etc

8 Works by Nominated Sub-Contractors- The name of the firm to be nominated together with a description of the sub-contract work; attendance onnominated sub-contractor where required shall be described and given as an item in each case for specialscaffolding additional to the Contractor's standing scaffolding, the provision of temporary access roads andhard standings in connection with structural steelwork, precast concrete components, piling, heavy items ofplant, unloading, distribution, hoisting, placing in position giving in the case of significant items the weightand/or size, the provision of covered storage and accommodation including lighting and power thereto,maintenance of specific temperature or humidity levels,etc

9 Goods and materials from Nominated Suppliers- The name of the supplier to be nominated; particulars shall be given where the Contractor is required to paythe costs of conveying goods and materials to the site and/or of any special packing or similar requirements

10 Works by government or statutory authorities- works which are to be carried out by a government or statutory authority in accordance with statutoryobligation shall be described, stipulating the scope and timing of the work and its effect on the Contractor'soperations

11 Works or goods and materials by the Employer- a description shall be given of works by others directly engage by the Employer; a description shall be givenof good and materials provided by or on behalf of the Employer

12 Pricing- Plant, tools, vehicles, scaffolding, site administration and security, transport for workpeople, protection ofwork in all sections, water for the works, lighting and power for the works, temporary roads, hard standings,crossings, temporary accommodation for the use of the Contractor, temporary telephones for the use of theContractor, traffic regulations, safety, healthy and welfare for the workpeople, disbursements arising from theemployment of workpeople, maintenance of public and private roads, removing rubbish, protecting casings andcoverings and cleaning the works on completion, drying the works, temporary fencing, hoardings, screens, fansplanked footways, guardrails, gantries, control of noise, pollution, all other statutory obligations, surety orperformance bond, shop drawings, co-ordination and record drawings, schedules, charts and the like showingthe progress, organisation of trades, progress photographs, etc

13 Contingencies


In monthly progress paymentvaluations, the priced items in thePreliminaries section are normallydivided into three categories, namelyinitial, recurring and final costs by theusually by the project consulting QS,in consultation with the Contractor.The proportion of initial and final costsare usually fixed and payable uponcommencement and at completion,while the recurring costs are thenspread evenly over the projectcompletion period.

The Relevant Provisions Under TheCommon Standard Forms OfBuilding/Construction Contract InMalaysia ?

Many standard forms of constructioncontract allow loss and expense to beclaimed by the Contractor andascertained by the SuperintendingOfficer (or the Architect / Engineer/PD/QS, depending on the formapplicable) for payment by theEmployer.

In the Royal Institution of CharteredSurveyors (RICS), UK (1987) haddefined Loss as “Any monies that thecontractor should have received,

but which he did not receive, becauseof one or more of those events listedin the conditions of the relevantcontract, which entitle him toreimbursement of direct loss and /orexpense” and Expense as “Any costto the contractor which is more than itwould otherwise have been, becauseof the events referred to above”

The word “direct” loss and expense,means “the direct consequence of theact giving rise to the claim” (A & BTaxis Ltd v The Secretary of State forAir – 1922) or “…that which flowsnaturally from the breach, withoutother intervening cause andindependently of specialcircumstances” (Saintline Ltd vRichardsons, Westgarth & Co Ltd –25 BLR140, 1940). In essence, forloss and expense to be admissible, itcannot be costs arising from indirect,remote, consequential or contributorycauses.

The Contractor is usually entitled toclaim for loss and/or expense sufferedif the work is disrupted/ affected/delayed due to certain specificcauses or events, which are of no faultof their own. In addition, he can also

claim for loss and/or expense sufferedresulting from the Employer’s ownbreach of contract i.e. delay and/ornon-payment, wrongfully terminationof the contract, etc.

The Contractor may choose to claimunder the relevant provisions in thecontract or bring legal action inarbitration/litigation for damagesresulting from the breach of contract.

In simple terms, loss and expenseitems may include the following ;

i. Prolongation costsii. Disruption costsiii. Additional Preliminariesiv. Overheadsv. Profitvi. Finance chargesvii. Other additional costs/expenses

not reimbursable under thecontract.

Under the standard formsof building / construction contractcommonly used in Malaysia, therelevant loss and expense clausesare briefly described and discussedbelow.

PAM Forms (1998 & 2006)

Under PAM Form of Building Contract,there are two provisions that enablethe Contractor to claim for additionalpreliminaries. However, such claimmust fall under the specificcircumstances provided under Clause24 – Loss and Expense for both PAM98 and 06 and Clause 11.6 – Variationfor PAM 98 and Clause 11.7 –Variation for PAM 06.

In order to succeed in the claim forloss and expense (in thiscase, additional preliminaries), theContractor must notify the Architect inwriting if the regular progress of

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(Continued On Page 84)

1 Preliminaries particulars - project and 12 Safety, health and welfarecontract details, works, goods &materialsby others, contractual obligations andliabilities, etc

2 Plant, tools and vehicles 13 Maintenance of publ and privateroads

3 Scaffolding 14 Removal of rubbish, debris, etc4 Site administration and security 15 Control of noise, pollution, etc5 Transport for work people 16 Statutory compliance and

obligations6 Protection of work 17 Surety or performance bond7 Water, lighting and power 18 Insurances8 Temporary telephone 19 Shop drawings, co-ordination

and record drawings9 Temporary roads, hardstandings, 20 Progress photographs

crossings, etc and reports10 Temporary accommodation 21 Schedules, charts, etc showing

progress of trades, works,activities.

11 Traffic regulations 22 Clearing, cleaning and handover

Notwithstanding, the Preliminaries section in most BQs, comprises typically ofthe following headed items:-


Works has been or is likely to be materially affected, whichhe had incurred or is likely to incur direct loss and/orexpense.

Thereafter, the Contractor needs to submit together withthe loss and expense claim, the relevant information anddetails to substantiate his claim to the Architect for hisascertainment, accordingly.

CIDB Form (2000)Under the CIDB Form of Contract, the contract provisionsconcerning loss and expense claim are Clause 1.1 –Definition, Clause 31 – Claims for Loss and Expense andClause 32 – Procedure for Claims.

In Clause 1.1 Definitions, Loss and Expense comprise ofactual costs and percentage of the said costs.

Loss and expense may comprise of:-

i. the direct relevant costs of labour, Equipment,materials, or goods actually incurred on the Site bythe Contractor; and

ii. costs of an overhead nature actually and necessarilyincurred on the Site by the Contractor; and

i. the amount equivalent to the percentage named in theAppendix of such cost referred to in (a) and (b) above,such amount shall be deemed to be inclusive of anyprofits, head office or other administrative overheads,financing charges (including foreign exchangelosses) and any other costs, loss or expense ofwhatsoever nature and howsoever arising. Thepercentage shall exclude interest payable pursuant tosub-clause 42.9(b).

The events which entitle the Contractor to claim for Lossand Expense are stipul;ated under Sub-Clause 31.1 –Reasons for Loss and Expense Claim.

Clause 32 of CIDB Form of Contract set out the proceduresto claim for Loss and Expense, as follows;

Clause 32.1 Notice of ClaimClause 32.2 Contemporary RecordsClause 32.3 Substantiation of ClaimsClause 32.4 Access to Contractor’s Books

and DocumentsClause 32.5 Payment of Claims

Clause 32.6 Failure to Comply

Under the CIDB Form, it is a condition precedent that theContractor should notify the Superintending Officer withinthirty (30) days, if he intends to claim for Loss andExpense.

JKR/PWD Form 203A (Rev. 10/83 & Rev. 2007)

Under JKR/PWD Form, the Contractor is entitled to claimfor additional preliminaries under Clause 44 – Loss andExpense caused by delays, and/or under Clause 5 (d) –Claims for compliance with the Superintending Officer’s(‘SO”) instructions a provided in JKR 203 (Rev. 10/83) andfor Loss and Expense claims under Clause 44 of JKR 203(Rev. 2007).

Similar to other aforesaid forms, the Contractor is requiredto notify the SO in writing of his intention to claim if theregular progress of Works has been materially affectedwhich he has incurred direct loss and/or expense due tothe following specific reasons:-

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(Continued from Page 82)

JKR 203 (Rev. 10/83)Clause

44 (c) by reason of directions given by the SOconsequential upon disputes with neighbouringowners provided the same is not due to anyact, negligence or default of the Contractor orany sub-contractor, nominated or otherwise, or

44 (f) by reason of the Contract not having received indue tme necessary instructions, drawings, levelsor instructions in regard to the nomination of sub-contractors and/or suppliers provided in thisContract, from the SO due to any negligence ordefault of the SO and for which he shall havespecifically applied n writing on a date whichhaving regard to the Date for Completion statedin the Appendix to theseConditions or to anyextension of time then fixed under thisConditions, was neither unreasonably distantfrom nor unreasonably close to the date on whichit was necessary for him to receive the same,

44 (i) by delay on the part of artists, tradesman orother engaged b the Government in executingwork not forming part of this Contract.


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IEM Form (1989)

Additional preliminaries claim will fall under Clause 43 and 5 (d), which is similar to JKR Clause 44, except in IEM Form,which provides an additional clause, Clause 43 (g) to cover for reason of delay in giving possession of the Site as providedunder Clause 38 (b) (i).

The following are the grounds for claims under loss and/or expense as provided in the aforesaid PAM 1998/2006, CIDB2000, JKR 203A and IEM 89.

Contract ClasueGrounds for Loss and/or Expense PAM PAM JKR IEM CIDB

2006 1998 203A 1989 20001 Late drawings, information, confirmations and/or instructions 24.3(a) 24.2(i) 43(f) 43(f) 31.1(b)2 Ditto, in regard to P.C. Sums & Provisional Sums 24.3(a)3 Failure or delay in giving possession of site 24.3(b) 43(g) 31.1(e)4 Compliance with the contract administrator’s instructions, eg. to resolve

discrepancies 24.2(iii) 5(d) 5(d) 31.1(c)5 Variation 5(d) 5(d) 31.1(h)6 Postponement of any work by Contract Administrator 24.3(c) 24.2(v)7 Suspension of works by the Contract Administrator 24.3(c) 31.1(g)8 Delays by artist, tradesmen or others employed by the Employer 24.3(d) 24.2 (iv) 43(i) 43(i) 31.1 (f)9 Delay or failure supply of goods and materials by the Employer 24.3(e) 24.2 (vi)10 Test and Inspection 24.3(f) 24.2(ii) 5(d) 5(d) 31.1(d)11 Any acts of prevention or breach of contract by the Employer 24.3(g) 24.212 Contract Administrator's instruction on antiquities and fossils 24.3(h) 31.1(i)13 Appointment of a replacement Architect/Engineer/QS/Specialist Consultant 24.3(i)14 Dispute with neighbouring owners 24.3(j) 43(c) 43(c)15 Reason of the execution of work for Provisional Quantity which the Architect is

not a reasonably accurate forecast of the quantity of work required 24.3(k)16 Failure of the Employer to give access to site in time or any passage to the site

which is in possession or control of the Employer 24.3 (l) 24.2 (vii)17 Suspension of works by the Contractor due to late payment and the withdrawal

of the Architect and/or Consultant 24.3 (m)18 Suspension of works by the Authority but not due to the Contractor's/Nominated

Sub-Contractor's negligence, omission, default and/or breach of contract 24.3 (n)19 Any other ground for Loss and Expense mentioned in the Contract 31.1 (j)20 One or more of the Excepted Risk 31.1 (a)

Grounds for Loss and/or Expense provided under the various Standard Forms of Constructions Contracts in Malaysia

JKR 203 (Rev. 2007)Clause

44 (c) suspension of works under Clause 50;

44 (d) directions given by the SO,consequential upon d i s p u t e swith neighbouring owners provided thesame is not due to any act, negligenceor default of the Contractor or anysub-contractor,nominated or otherwise;

44 (e) SO's instruction issued under Clause 5hereof, PROVIDED THAT suchinstructions are not issued due to anyact, negligence, default or breach ofthis Contract by the Contractor or anysub-contractor, nominated orotherwise;

JKR 203 (Rev. 2007)Clause

44 (f) the Contractor not having received in due timeinstructions in regard to the nomination of sub-contractorsand/or suppliers provided in this Contract, necessaryinstructions, drawings or levels for the execution of theWorks from the SO due to any negligence or default ofthe SO PROVIDED THAT the Contractor shall havespecifically applied in writing on a date which havingregard to the Date for Completion stated in Appendix orto any extension of time then fixed under this clause, wasneither unreasonably distant from nor unreasonably closeto the date on which it was necessary for him to receivethe same;

44 (h) delay on the part of artists, tradesmen or others engagedby the Government in execting work not forming part ofthis Contract

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Case Studies / Scenarios

Additional preliminaries is actually apart of loss and expense claim. TheContractor is entitled to loss andexpense claim under Hadley vBaxendale (1854) 9 Ex341 first limb,i.e. ‘may fairly and reasonably beconsidered to have arisen naturally,that is according to the usual courseof things.’. Usually, the Contractor’sclaim for additional preliminariesshould be evaluated based on actualcost incurred, in the absence of anyexpressed method of evaluation.

Notwithstanding, there are cases orscenarios whereby the evaluation ofthe additional preliminaries does notnecessary have to be based on theactual cost incurred, as it depends onthe provisions of the contract orproject circumstances or conduct ofthe contracting parties. In such cases,the knowledge and skills of a QS tovalue the preliminaries is called for.

The following are a few typicalcases/scenarios, whereby additionalpreliminaries have been

assessed/evaluated based ondifferent methods from the usualactual cost method.

In a case where the contract isterminated by the Employer due to theContractor’s default or breach, theEmployer had contended that all thepreliminaries items incurred should beevaluated as loss and expense andtherefore be based upon actual costsincurred instead of valuing them aswork done.

Was the Employer correct inevaluating all the additional costs ofPreliminaries incurred based onactual costs ?

To answer this question, let’sinvestigate the provision of thiscontract for termination/determination.The provision states that, inter alia:

“If for any reason the Employer'semployment under the Main Contractis determined (whether due to anydefault of the Employer or otherwise),then the employment of theContractor under this Contract shall

thereupon also be determined and theContractor shall be entitled to be paid(in so far as such amounts or itemshave not already been covered bypayments on account made to theContractor) as follows:-

(i) The value of the Contract Workscompleted at the date of thedetermination, such value to becalculated according to Clause17 hereof; or

(ii) The value of work begun andbeing executed but notcompleted at the date of suchdetermination, such value to becalculated according to Clause17 hereof; or

(N.B. The Clause 17 referred above isfor Valuation of Variation whichis similar to JKR Clause 25)

From the above provision, theContractor is entitled to be paid by theEmployer based on the followingvaluation procedure:-(i) The value of the Contract Works

completed at the date of thedetermination. Such completedwork to be valued based on thestipulated contract price or rateand is accordingly to be valuedunder the rules for valuation ofvariation works.

(ii) The value of work begun andbeing executed but notcompleted at the date ofthe determination. Suchuncompleted work is consideredto fall under the rules forvaluation of variation works.

As mentioned earlier, Preliminaries isa part of the Bills of Quantities relatingto the contract work. So, it should bevalued as work done for the worksexecuted up to the date of the

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termination/determination instead ofbased on actual costs. The QS for thisproject should undertake thisvaluation task, accordingly.

Quoting from Hudson’s Building andEngineering Contracts, 11th Edition, p1602 explains the person who isappointed to undertake this valuationtask;

“It has been held that if a man is,on account of his skill in suchmatters, appointed to make avaluation, in such manner that inmaking it he may, in accordancewith the appointment, decidesolely by the use of his eyes, hisknowledge and his skill, he is notacting judicially: he is using theskill of a valuer, not of a judge. Inthe same way, if two persons areappointed for a similar purpose,they are not arbitrators but onlyvaluers. They have to determinethe matter by using solely theirown eyes and with knowledge andskill.”

It is often very difficult to value to whatextent of the preliminaries items orworks that had been executed. Invaluing preliminaries, one wouldwonder whether the Contractor hadpriced the cost for example a towercrane spread across the trade rates orin the preliminaries items. A distinctionhas to be made as to the Contractor’sfixed costs (e.g. mobilisation anddemobilisation); time related costs(e.g. site management, plant andequipment, etc.) or quantity relatedcosts (utilities, protection, etc.).

In the Singapore Institute of Architect(SIA) form of contract, for example,the Contractor is required to indicatein his tender price for preliminariesitems in the form of quantity related,time related or fixed cost so that anyadditional expenses for thepreliminaries items, the indicatedtender price of the preliminaries itemsshall be used as the basis forvaluation and adjustment.

Consequently, when evaluating the

Contractor’s preliminaries claim, agood knowledge and understandingof the cost structure and pricing ofcontract is essential to enable a fairand reasonable valuation to be made,accordingly.

Methods In Assessing AdditionalCosts Of Preliminaries

In practice, it is common to userecurring costs based upon estimationor prorated time basis or formulamethod or negotiated basis from thepriced preliminaries in BQ.

Can this practice apply in evaluatingthe additional preliminaries? Thefollowing are a few methodsemployed in evaluating additionalpreliminaries.

On Amended Contract Basis

In the Malaysian construction industry,the standard form of contract usedare often subject to addendum/supp lemen ta r y /mod i f i ca t i on /

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amplification/special provisions orconditions to suit the circumstancesprevailing on the project concern.

An example of an Addendum toPAM98 Clause 24, is as follows:

“The Contractor’s claim for loss and/orexpense (if any) under this Clauseshall be confined only to thoserecurring cost of Preliminaries itemswhich have been priced for thisContract and only for thosePreliminaries items which are deemedapplicable. The Contractor shall notbe entitled to claim on any other basisother than the aforesaid basis as heshall be deemed to have allowed forall other loss and/or expense(excluding the recurring Preliminariesexpenses) directly or indirectlyincurred by him caused bydisturbance of regular progress ofWorks under this Clause.”

On Formula BasisAnother example is the JKR 203AClause 5(d), 44 & 48(d) and JKR

PWD DB/T Clause 45.2 & 46 underSpecial Provisions, which is based onthe ‘Special Formula’ for calculation ofcompensation for Loss and Expenseclaim under Preliminaries andGeneral Requirement, as follow:

a) Cost of Extension of InsurancePolicies

A x CEP/TDP

A = Amount of premium paid forthe whole duration of theextended insurance period asprovided under the Contract

CEP= Total Claimable ExtendedPeriod

TDP = Total Delayed Period

b) Cost of Extension ofPerformance Bond/PerformanceSum Guarantee

5% x OC x CEP x BLR/365

5% = Maximum percentageamount of Performance

Bond/Performance SumGuarantee, of the Contract Value

OC = Original Contract ValueCEP= Total Claimable Extended

PeriodBLR= Base Lending Rate per

annum as on Date of OriginalCompletion of Work

c) Other Items(i) For Building Works:

14% x PL x CEP/OP(ii) For Civil Engineering Works:

20% x PL x CEP/OP

PL = Amount of PreliminariesWork and General Requirementin the Contract not inclusive ofProvisional Sum and specificitems for the Contract (e.g.Design and supervision fees,Traffic management plan,Environmental managementplan, I-Supervision, Aerialsurvey, Digital slope mapping,Permanent diversion ofservices, KTMB’s flagging andinconvenience charges, Road


maintenance during constructionand other similar items)subjected to a maximum amountnot exceeding 6% of the value ofBuilder’s Work for the Contract(less the value of PreliminariesWork & General Requirement)

CEP= Total Claimable ExtendedPeriod

OP = Original Contract Period (indays) ……………..”

JKR had adopted the aforesaidformula method for the followingreasons;

i) In accordance with JKR’scontract, the Final Accountneeds to be prepared not morethan six (6) months afterpractical completion of theWorks. However, the preparationof Final Account is often delayedfor the Contractor who has madea claim particularly on additionalpreliminaries upon issuance ofCertificate of Delay andExtension of Time for the projectconcern.

ii) In the previous procedure, allclaims submitted by theContractor required to beexamined and verified of itsvalidity and reasonableness. Assuch, a longer time may berequired in the valuation andverification stage prior to JKR’sClaim Committee certificationand approval.

iii) Therefore, in order to expedite

the valuation, certification andapproval process for thiscompensation claim, a decisionhad been to allow the SpecialFormula to be adopted forvaluation and certification of theclaim concern.

The above formula method wasadopted and practised until February2006, when JKR had decided to moveaway from the above formula methodto revert to documentary evidencebased on actual costs for such claims.

On Negotiation/Agreement BasisIn some cases, the contracting partiessettle their claim for additionalpreliminaries by negotiation. Theywould agree to base on recurring costor formula method as the basis toassess the value preliminaries itemsin lieu of actual costs. Such methodwould avoid the tedious and timeconsuming process, i.e. to collate andprovide the necessary documentaryevidence for evaluation and verifyingthe actual costs, which can lead to

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dispute, and may end up inarbitration/litigation subsequently,thereby incurring more costs to theparties, eventually.

Conclusion/Solution

Whether the additional preliminariesare evaluated based upon actual costincurred or recurring cost ornegotiation/agreed basis, thecontracting parties should come to anagreement at the formation of thecontract or at the outset of the projecton the method of evaluating theadditional preliminaries to be adopted,when a prolongation/disruptionsituation arises.

It is often a tedious, costly and timeconsuming process in compiling andassessing the documentary evidence(usually voluminous) in order to provethe actual costs incurred, which oftenleads to dispute and possiblyarbitration/litigation rather thanamicable settlement.

It must be noted that, actual costs foradditional preliminaries need notnecessarily always mean a lower costthan recurring cost or formula methodas determined or valued by theArchitect / Engineer / SO / PD or QS,depending on the form of contractused. In some cases, actual costs areactually higher than recurring costs orformula method.

Nevertheless, unless the abovecircumstances or conditions asdescribed apply then the evaluation ofadditional preliminaries should bebased on actual reasonable costswhich flow from the claim event.


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References/Bibliography

1. Wallace, I.N. Duncan, Hudson’s Building & Engineering Contracts,11th Edition,Sweet & Maxwell, 1995.

2. Ong, H.T., “Should additional Preliminaries be evaluated on recurring costs basisor actual costs incurred” – One Day Joint Contract Seminar: Extension of Time,Variations, Loss & Expense and Prolongation Claims” jointly organised by BKAsia Pacific and Master Builders Association of Malaysia, 27 September 2007

3. References are also made to several Malaysia standard forms of contract,namely:-i) PAM Forms of Building Contract (1998 & 2006)ii) JKR/PWD Forms of Contract (203A – Rev 10/83 & Rev. 2007)iii) JKR PWD/Standard Form of Design & Build / Turnkey Contract (PWD Form

DB/T) (2002 Edition)iv) IEM Conditions of Contract for Works Mainly of Civil Engineering

Construction (1st Edition – 1989)v) CIDB Form of Contract for Building Works (2000 Edition)

In the next issue of the MBAM journal the article will answer the question on“What is Force Majeure and its implications?”

The Entrusty Group includesEntrusty Consultancy Sdn Bhd(formerly known as J.D. Kingsfield (M)Sdn Bhd), BK Burns & Ong Sdn Bhd

(a member of theAsia wide group BKAsia Pacific), Pro-Value Management SdnBhd, Agensi Perkerjaan Proforce Sdn Bhd and International Master TrainersSdn Bhd providing project, commercial and contractual management services,risk, quantity, quality and value management, recruitment services andcorporate training programmes to various industries, particularly in constructionand petrochemical, both locally and internationally.

For further details, please visit website: www.entrusty.com or contact HT Ongat 22-1 & 2 Jalan 2/109E, Desa Business Park, Taman Desa, 58100 KualaLumpur, Malaysia.Tel: 6(03)-7982 2123Fax: 6(03)-7982 3122Email: [email protected]

Entrusty Group provides 30 minutes of free consultancy (with priorappointment) to MBAMmembers on their contractual questions. The Group alsoprovides both in house and public seminars/workshops in its various areas ofexpertise.

Upcoming Public Seminars in 2009• Certifications and Payments.• Common Contractual Issues/Problems in Malaysia.• Determination/Termination of Construction Contracts in Malaysia.• Pertinent Contractual Provisions in Construction Contracts